PEAD Screener

PEAD Screener

The PEAD (Post-Earnings Announcement Drift) Screener exploits one of the most rigorously documented, mathematically proven anomalies in the stock market. It hunts for companies that have recently shocked Wall Street with a massive earnings beat and gapped up on huge volume, allowing you to ride the institutional "drift" upward over the following weeks.

What is Post-Earnings Announcement Drift?

According to the Efficient Market Hypothesis, if a company reports blowout earnings, the stock price should gap up instantly to perfectly reflect the new valuation, and then stop moving. But reality is different.

Decades of academic research have proven the existence of Post-Earnings Announcement Drift (PEAD). When a company unexpectedly crushes earnings, Wall Street analysts are slow to update their models. Massive institutional mutual funds cannot buy billions of dollars of stock in a single day without crashing the system, so they are forced to buy slowly, over the course of weeks or months.

This creates a slow, persistent, highly predictable "drift" upward in the stock price after the initial earnings gap.

The PEAD Screener skill programmatically scours the market for these exact institutional footprints. It finds the stocks that exploded yesterday, so you can ride the drift tomorrow.

How Pierce AI Executes It

When you ask Pierce for a PEAD scan, it executes a highly specific fundamental and technical crossover search:

1. The Fundamental Shock Filter: Pierce first queries the broader market database for companies exhibiting extreme fundamental acceleration (e.g., EPS growth > 20% and Sales growth > 20%). A stock cannot trigger a PEAD run unless the underlying financial surprise was massive.
2. The Liquidity Filter: PEAD relies on institutional buying pressure. Pierce automatically filters out illiquid micro-caps where a single retail trader could randomly spike the volume.
3. The Technical "Gap" Identification: Pierce takes the list of fundamental winners and inspects their recent daily price action. It specifically hunts for a massive single-day gap up (e.g., the stock opened 10% higher than it closed the previous day) accompanied by explosive, undeniable volume (e.g., 300% to 500% above average daily volume).
4. Consolidation Analysis: The safest way to trade a PEAD is to wait for the stock to pause after the initial gap. Pierce evaluates the chart to see if the stock is holding its gains and consolidating in a tight, tradable pattern (like a "High and Tight Flag").

Key Metrics & Deliverables

By running the PEAD Screener, you receive a curated list of high-momentum catalysts:

• The Catalyst Table: A clean breakdown of the surviving stocks ranked by their Composite Score. It includes the PEAD Score (passes out of 5) and Composite Score (0-100 weighted index).
  • PEAD Score: Counts how many criteria are passed (EPS Growth >= 20%, Sales Growth >= 20%, positive gap, elevated volume, price > SMA50).
  • Composite Score: Weighted out of 100 to reward the strongest fundamental surprises and the best technical flag setups:
    • EPS Growth (35%): Growth >= 40% (100% score), 20-40% (70% score).
    • Sales Growth (25%): Growth >= 30% (100% score), 20-30% (70% score).
    • Technical Setup (20%): Price > SMA50 and within 10% of 52w high (100% score), price > SMA200 (50% score).
    • Volume & Liquidity (20%): PEG < 2.0 or volume acceleration (100% score), else 50%.
• The Setup Verdict: Pierce evaluates the exact technical structure following the gap. Did the stock gap up and then instantly crash back down (a "gap and crap")? Or did it gap up and quietly move sideways, building energy for a secondary breakout?
• The Absolute Floor (Stop-Loss): Pierce provides the golden rule of PEAD trading: Never let a PEAD stock close below the low of the earnings gap day. It will explicitly highlight this risk-management parameter for you.

Example Prompts & Use Cases

You can actively push Pierce to hunt for earnings momentum using these specific prompts:

• "Run a PEAD screen. Find me tech stocks that recently gapped up on massive earnings growth."
• "Scan the market for Post-Earnings Announcement Drift candidates. Include EPS growth and gap size."
• "What liquid stocks have gapped up more than 10% in the last month on 300% volume?"
• "I'm looking for high-and-tight flags that formed after a massive earnings surprise. Run the PEAD screener."

By explicitly asking for the "PEAD" screener, you trigger the search for the specific gap-and-drift anomaly.

Methodology Notes & Limitations

Trading the PEAD anomaly can be incredibly lucrative, but it requires strict structural discipline:

• You Are Buying "High": PEAD trading is deeply uncomfortable for value investors because you are explicitly buying a stock after it has already exploded 15% upward. You must trust the math that the institutional drift will carry it higher.
• The "Low of the Gap Day" Rules All: If you buy a PEAD candidate, and the stock eventually falls and drops below the lowest price recorded on the day it originally gapped up, the thesis is completely invalidated. The institutional buying was a fake-out. You must sell immediately.
• Volume is the Only Truth: A 15% earnings gap on terrible, below-average volume is a trap set by market makers to trap retail traders. The PEAD screener prioritizes setups where the volume is so massive it can only have been generated by institutions.

Built for the Momentum Surfer

Catching the exact bottom of a stock is impossible. The PEAD Screener doesn't try. Instead, it waits for a company to explicitly prove to the entire market that its business is exploding, waits for the massive institutions to start allocating capital, and then allows you to safely surf the resulting wave of forced institutional buying.

Note: The PEAD Screener requires intensive historical volume and gap detection algorithms and is included in the Preferred tier and above.